Edgar Filing: BRIDGE BANCORP INC

Bridge Bancorp, Inc. Amended Form 10-K 2004

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(AMENDMENT NO. 1)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

Commission file number 000-18546

BRIDGE BANCORP, INC.

(Exact name of registrant as specified in its charter)

NEW YORK	11-2934195
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK	11932
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (631) 537-1000

Securities registered under Section 12 (b) of the Exchange Act:

Title of each class	Name of each exchange on which registered
None	None

Securities registered under Section 12 (g) of the Exchange Act:

Common Stock, Par Value of $0.01 Per Share,

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) of this chapter is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X] No [ ]

The approximate aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing price of the Common Stock on June 30, 2004, was $174,814,899.

The number of shares of the Registrant’s Common Stock outstanding on April 26, 2005 was 6,260,644.

Portions of the following documents are incorporated into the Parts of this Report on Form 10-K indicated below:

The Registrant’s definitive Proxy Statement for the 2005 Annual Meeting to be filed pursuant to Regulation 14A filed on or before April 30, 2005 (Part III).

Explanatory Note

The registrant hereby amends Part II, Item 8., “Financial Statements and Supplementary Data,” Item 9A., “Controls and Procedures,” and Part IV, Item 15., “Exhibits,” of the Form 10-K for Bridge Bancorp, Inc. (the “Company”) for the fiscal year ended December 31, 2004 filed with the Securities and Exchange Commission on March 15, 2005. This Amendment No. 1 has been filed to correct a typographical error in the Report of the Independent Registered Public Accounting Firm. Additionally, pursuant to a Securities and Exchange Commission exemptive order, management’s report on its assessment of the Company’s internal control over financial reporting, and the attestation report of the Company’s independent registered public accounting firm on management’s assessment are being filed under cover of this Form 10-K/A.

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Item 8. Financial Statements and Supplementary Data

CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share amounts)


	December 31,			December 31,
	2004			2003
ASSETS
Cash and due from banks	$	8,744		$	12,906
Interest earning deposits with banks		118			133
Total cash and cash equivalents		8,862			13,039

Securities available for sale, at fair value		202,042			193,699
Securities, restricted		1,979			1,642
Securities held to maturity (fair value of $21,131 and $14,379, respectively)		21,213			14,396
Total securities, net		225,234			209,737

Loans		296,134			273,188
Less:
Allowance for loan losses		(2,188	)		(2,144	)
Loans, net		293,946			271,044

Banking premises and equipment, net		13,817			11,623
Accrued interest receivable		2,469			2,359
Other assets		2,872			3,811
Total Assets	$	547,200		$	511,613

LIABILITIES AND STOCKHOLDERS’ EQUITY
Demand deposits	$	158,366		$	159,405
Savings, N.O.W. and money market deposits		242,814			229,847
Certificates of deposit of $100,000 or more		35,306			35,841
Other time deposits		32,825			32,066
Total deposits		469,311			457,159

Overnight borrowings		26,700			5,900
Accrued interest payable		273			266
Other liabilities and accrued expenses		3,703			5,494
Total Liabilities		499,987			468,819

Stockholders’ equity:
Common stock, par value $.01 per share:
Authorized: 20,000,000 shares; 6,386,306 issued; 6,254,489 and 4,155,595 shares,
outstanding at December 31, 2004 and 2003, respectively		64			43
Surplus		21,462			21,194
Undivided profits		27,856			21,982
Less: Treasury Stock at cost, 131,817 and 102,002 shares at December 31, 2004 and 2003, respectively		(2,330	)		(1,909	)
Unearned stock awards		(121	)		(81	)
		46,931			41,229
Accumulated other comprehensive income (loss):
Net unrealized gain on securities, net of taxes of $267 and $1,151 at December 31, 2004 and 2003,
respectively		403			1,736
Net minimum pension liability, net of taxes of $81 and $113 at December 31, 2004 and 2003, respectively		(121	)		(171	)
Total Stockholders’ Equity		47,213			42,794
Total Liabilities and Stockholders’ Equity	$	547,200		$	511,613

See accompanying notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

Year Ended December 31,	2004		2003		2002

Interest income:
Loans	$	18,850	$	17,971	$	17,485
Mortgage-backed securities		4,137		4,012		5,179
U.S. Treasury and government agency securities		2,187		2,285		1,798
State and municipal obligations		1,615		1,559		1,660
Federal funds sold		98		74		295
Other securities		34		66		68
Deposits with banks		2		1		1
Total interest income		26,923		25,968		26,486

Interest expense:
Savings, N.O.W. and money market deposits		1,331		1,478		2,889
Certificates of deposit of $100,000 or more		475		477		706
Other time deposits		457		597		871
Federal funds purchased		33		44		17
Other borrowed money		55		5		7
Total interest expense		2,351		2,601		4,490

Net interest income		24,572		23,367		21,996
Provision for loan losses		300		-		220

Net interest income after provision for loan losses		24,272		23,367		21,776

Other income:
Service charges on deposit accounts		2,328		2,278		2,024
Fees for other customer services		1,341		1,185		1,184
Net securities gains		734		826		-
Title fee income		866		342		96
Other operating income		171		85		101
Total other income		5,440		4,716		3,405

Other expenses:
Salaries and employee benefits		7,456		6,900		6,365
Net occupancy expense		1,283		1,226		1,136
Furniture and fixture expense		980		1,013		974
Advertising		356		378		355
Data/Item processing		374		322		249
Other operating expenses		3,115		3,158		2,863
Total other expenses		13,564		12,997		11,942

Income before provision for income taxes		16,148		15,086		13,239
Provision for income taxes		5,771		5,488		4,722
Net income	$	10,377	$	9,598	$	8,517
Basic earnings per share	$	1.66	$	1.55	$	1.38
Diluted earnings per share	$	1.64	$	1.53	$	1.37

All per share amounts have been adjusted for the stock split.

See accompanying notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)

Accumulated

Other

Common Stock

Unearned

Comprehensive

Shares

Comprehensive

Undivided

Treasury

Stock

Income

Outstanding

Amount

Surplus

Income ⁽¹⁾

Profits

Stock

Awards

(Loss)

Total

Balance at December 31, 2001

4,166,264

43

$

21,154

$

11,240

$

(1,608

)

$

2,032

$

32,861

Net income

$

8,517

8,517

8,517

Purchase of treasury stock

(57,000

)

(1,067

)

(1,067

)

Stock awards vested

3,222

7

53

60

Exercise of stock options

5,500

(36

)

98

62

Cash dividends declared, $0.41 per share

(2,518

)

(2,518

)

Other comprehensive income, net of tax

Unrealized net gains in securities available for sale

2,248

2,248

2,248

Minimum pension liability adjustment

(192

)

(192

)

(192

)

Comprehensive Income

10,573

Balance at December 31, 2002

4,117,986

43

21,125

17,239

(2,524

)

4,088

39,971

Net income

9,598

9,598

9,598

Stock awards vested

4,872

42

81

$

40

163

Stock awards granted

34

87

(121

)

-

Exercise of stock options, net of tax benefit

32,737

(7

)

38

447

478

Cash dividends declared, $0.78 per share

(4,893

)

(4,893

)

Other comprehensive income, net of tax

Unrealized net losses in securities available for sale

(2,597

)

(2,597

)

(2,597

)

Minimum pension liability adjustment

74

74

74

Comprehensive Income

7,075

Balance at December 31, 2003

4,155,595

43

21,194

21,982

(1,909

)

(81

)

1,565

42,794

Net income

10,377

10,377

10,377

Stock awards vested

5,040

30

66

73

169

Stock awards granted

58

55

(113

)

-

Exercise of stock options, net of tax benefit

24,417

201

69

270

Treasury stock purchases

(20,000

)

(611

)

(611

)

Cash dividends declared, $0.72 per share

(4,503

)

(4,503

)

Effect of three-for-two stock split (in the form of a stock dividend)

2,089,437

21

(21

)

-

Other comprehensive income, net of tax

Unrealized net losses in securities available for sale

(1,333

)

(1,333

)

(1,333

)

Minimum pension liability adjustment

50

50

50

Comprehensive Income
$
9,094

Balance at December 31, 2004

6,254,489

$

64

$

21,462

$

27,856

$

(2,330

)

$

(121

)

$

282

$

47,213

(1) Disclosure of reclassification amount:

December 31,

2004

2003

2002

Comprehensive Income Items:

Unrealized (loss)/gain arising during the period, net of tax

of $591, $1,357 and $1,447 in 2004, 2003 and 2002

$

(891

)

$

(2,098

)

$

2,248

Less: reclassification adjustment, net of taxes

of $293, $327, $0 in 2004, 2003 and 2002

for losses/(gains) included in income

442

499

-

$

(1,333

)

$

(2,597

)

$

2,248

All per share amounts have been adjusted for the stock split.

See accompanying notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,	2004			2003			2002

Operating activities:
Net Income	$	10,377		$	9,598		$	8,517
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses		300			-			220
Depreciation and amortization		950			956			982
Amortization and accretion, net		1,261			2,059			1,618
Earned or allocated expense of restricted stock awards		73			40			60
SERP expense		149			142			107
Net securities gains		(734	)		(826	)		-
(Increase) decrease in accrued interest receivable		(110	)		249			(455	)
(Provision) benefit for deferred income taxes		(179	)		(37	)		21
Decrease (increase) in other assets		1,118			(2,526	)		629
Increase in accrued and other liabilities		436			243			3
Net cash provided by operating activities		13,641			9,898			11,702

Investing activities:
Purchases of securities available for sale		(96,157	)		(146,393	)		(99,930	)
Purchases of securities held to maturity		(21,213	)		(14,421	)		(12,946	)
Proceeds from sales of securities available for sale		56,005			71,637			-
Proceeds from maturing securities available for sale		4,750			4,752			10,385
Proceeds from maturing securities held to maturity		14,396			11,022			17,859
Proceeds from principal payments on mortgage-backed securities		23,980			51,592			36,534
Net increase in loans		(23,202	)		(24,950	)		(33,201	)
Purchases of banking premises and equipment		(3,144	)		(2,752	)		(2,028	)
Net cash used by investing activities		(44,585	)		(49,513	)		(83,327	)

Financing activities:
Net increase in deposits		12,165			50,750			49,254
Increase (decrease) in other borrowings		20,800			(6,400	)		12,300
Payment for the purchase of treasury stock		(611	)		-			(1,067	)
Net proceeds from exercise of stock options
issued pursuant to equity incentive plan		203			440			62
Cash dividends paid		(5,790	)		(2,943	)		(2,480	)
Net cash provided by financing activities		26,767			41,847			58,069

(Decrease) increase in cash and cash equivalents		(4,177	)		2,232			(13,556	)
Cash and cash equivalents beginning of year		13,039			10,807			24,363
Cash and cash equivalents end of year	$	8,862		$	13,039		$	10,807

Supplemental Information-Cash Flows:
Cash paid for:
Interest	$	2,344		$	2,726		$	3,973
Income taxes	$	5,336		$	5,501		$	3,526
Noncash investing and financing activities:
Dividends declared and unpaid	$	1,313		$	2,609		$	659

See accompanying notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004, 2003 and 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Bridge Bancorp, Inc. (the “Company”) is incorporated under the laws of the State of New York as a single bank holding company. The Company’s business currently consists of the operations of its wholly-owned subsidiary, The Bridgehampton National Bank (the “Bank”). The Bank includes its real estate investment trust subsidiary, Bridgehampton Community, Inc. and a financial subsidiary, Bridgehampton Abstract Holding LLC, which has a 100% ownership in an investment in Bridge Abstract LLC (“Bridge Abstract”). Effective April 1, 2004, Bridgehampton Abstract Holding LLC acquired 100% ownership of Bridge Abstract from 51% ownership. Subsequent to December 31, 2004, Bridgehampton Abstract Holding LLC was dissolved. The financial statements have been prepared in accordance with U.S. generally accepted accounting principles and to general practices within the financial institution industry. The following is a description of the significant accounting policies that the Company follows in preparing its Consolidated Financial Statements.

a) Basis of Financial Statement Presentation

The accompanying Consolidated Financial Statements are prepared on the accrual basis of accounting and include the accounts of the Company and its wholly-owned subsidiary, the Bank. All material intercompany transactions and balances have been eliminated.

The preparation of financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of each consolidated statement of condition and the related consolidated statement of income for the years then ended. Future results could differ from those estimates. The allowance for loan losses, fair values of financial instruments, stock options, deferred taxes, prepayment speeds on mortgage-backed securities, and pension are particularly subject to change.

b) Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold, which mature overnight. Cash flows are reported net for customer loan and deposit transactions and overnight borrowings.

c) Securities

The Company is required to report readily-marketable equity and debt securities in one of the following categories: (i) “held-to-maturity” (management has a positive intent and ability to hold to maturity), which are to be reported at amortized cost and (ii) “available for sale” (all other debt and marketable equity securities), which are to be reported at fair value, with unrealized gains and losses reported net of tax, as accumulated other comprehensive income, a separate component of stockholders’ equity. Restricted securities, as disclosed on the balance sheet including Federal Home Loan Bank stock and Federal Reserve Bank stock, are carried at cost.

Premiums and discounts on investment in debt and equity securities are amortized to expense and accreted to income over the estimated life of the respective securities using the interest method. Gains and losses on the sales of securities are recognized upon realization based on the specific identification method. Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.

d) Loans and Loan Interest Income Recognition

Loans are stated at the principal amount outstanding, less net deferred origination and commitment fees. Loan origination and commitment fees and certain direct costs incurred in connection with loan originations are deferred and amortized to income over the life of the related loans as an adjustment to yield. When a loan prepays, the remaining unamortized balance is recognized in the current year. Interest on loans is credited to income based on the principal outstanding during the period. Loans that are 90 days past due are automatically placed on nonaccrual; however, loans are evaluated on a case-by-case basis. Interest income is not accrued or recognized on nonaccrual loans until payments are received. Payments received are applied first to interest due (interest is calculated as if the note had remained active) and then to principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled

Page -6-

principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfall generally are not classified as impaired.

e) Allowance for Loan Losses

The Bank monitors its entire loan portfolio on a regular basis, with consideration given to detailed analyses of classified loans, repayment patterns, current delinquencies, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance. Based on the determination of management and the Classification Committee, the overall level of reserves is periodically adjusted to account for the inherent and specific risks within the entire portfolio. Based on the Classification Committee’s review of the classified loans and the overall reserve levels as they relate to the entire loan portfolio at December 31, 2004, management believes the allowance for loan losses is adequate.

A loan is considered a potential charge-off when it is in default of either principal or interest for a period of 90, 120 or 180 days, depending upon the loan type, as of the end of the prior month. In addition to date criteria, other triggering events may include, but are not limited to, notice of bankruptcy, death of the borrower, and deficiency balance from the sale of collateral.

While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in conditions. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to, or charge-offs against, the allowance based on their judgment about information available to them at the time of their examination.

f) Banking Premises and Equipment

Buildings, furniture and fixtures and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method using a useful life of fifty years for buildings and a range of two to ten years for equipment, furniture and fixtures. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements whichever is shorter. Land is recorded at cost.

Improvements and major repairs are capitalized, while the cost of ordinary maintenance, repairs and minor improvements is charged to operations.

g) Other Real Estate Owned

Other real estate owned consists of real estate acquired by foreclosure or deed in lieu of foreclosure and is recorded at the lower of the net unpaid principal balance at the foreclosure date plus acquisition costs or fair value. Subsequent valuation adjustments are made if fair value less estimated costs to sell the property falls below the carrying amount. At December 31, 2004 and 2003, the Company carried no other real estate owned.

h) Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer-financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.

i) Income Taxes

The Company follows the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recognized if it is more likely than not that a future benefit will be realized. It is management’s position, as currently supported by the facts and circumstances, that no valuation allowance is necessary against any of the Company’s deferred tax assets.

j) Treasury Stock

Repurchases of common stock are recorded as treasury stock at cost. Treasury stock is reissued using the first in, first out method.

k) Earnings Per Share

Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options were exercised and if stock

Page -7-

awards were fully vested and resulted in the issuance of common stock that then shared in the earnings of the Company, is computed by dividing net income by the weighted average number of common shares and common stock equivalents.

l) Dividends

Cash available for dividend distribution to shareholders of the Company must initially come from dividends paid by the Bank to the Company. The approval of the Regional Administrator of National Banks is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of the Bank’s net income of that year combined with its retained net income of the preceding two years. The Bank had approximately $14,731,000 available as of December 31, 2004, which may be paid to the Company as a dividend without prior approval.

m) Stock Activity

On June 21, 2004, the Board of Directors declared a three-for-two stock split, in the form of a stock dividend, payable July 23, 2004 to stockholders of record as of July 9, 2004. The stock split increased outstanding common shares from 4,257,597 to 6,386,306. All references in the Consolidated Financial Statements and Notes thereto and Management’s Discussion and Analysis to per share amounts, and market prices of the common stock have been restated giving retroactive recognition to the stock split.

The transactions affecting common stock issued and outstanding and treasury stock are reflected in the table below:

	Common Stock
	Shares Issued			Shares Issued and Outstanding			Treasury Stock
Balance at December 31, 2003		4,257,597			4,155,595			102,002

Stock awards vested					5,040			(5,040	)
Exercise of stock options					21,417			(21,417	)
Purchase of Treasury Stock					(3,000	)		3,000
Effect of three for two stock split		2,128,798			2,089,526			39,272
Fractional shares		(89	)		(89	)
Exercise of stock options					3,000			(3,000	)
Purchase of Treasury Stock					(17,000	)		17,000

Balance at December 31, 2004		6,386,306			6,254,489			131,817

n) Segment Reporting

While management monitors the revenue streams of the various products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

o) Stock Based Compensation Plans

Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all the options granted had an exercise price equal to the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.”

For the Year Ended		2004		2003		2002
(In thousands, except per share amounts)

Net Income:	As Reported:	$	10,377	$	9,598	$	8,517
Pro Forma:			10,332		9,514		8,441
Diluted EPS:	As Reported:	$	1.64	$	1.53	$	1.37
Pro Forma:			1.64		1.52		1.35
Basic EPS:	As Reported:	$	1.66	$	1.55	$	1.38
Pro Forma:			1.65		1.53		1.37

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The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for the following years:

For the Year Ended	2004			2003			2002

Risk free interest rate		3.02	%		3.10	%		4.85	%
Expected dividend yield		2.75	%		3.19	%		3.24	%
Expected volatility		23.5	%		44.4	%		45.6	%

p) Comprehensive Income

Comprehensive income includes net income and all other changes in equity during a period, except those resulting from investments by owners and distributions to owners. Other comprehensive income includes revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but excluded from net income. Comprehensive income and accumulated other comprehensive income are reported net of related income taxes. Accumulated other comprehensive income for the Company includes unrealized holding gains or losses on available for sale securities and the minimum pension liability. Such gains or losses are net of reclassification adjustments for realized gains (losses) on sales of available for sale securities.

q) Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

r) New Accounting Standards

On March 9, 2004, the SEC issued Staff Accounting Bulletin No. 105 (“SAB 105”), “Application of Accounting Principles to Loan Commitments.” According to the release, the fair value of the loan commitment is determined without considering the value of future cash flows related to servicing the loan, and thus the fair value represents the value of having to make a loan at what may become a below-market rate. This guidance is applicable for mortgage loan commitments for loans held-for-sale entered into April 1, 2004 or later. In management’s opinion, the adoption of SAB 105 did not have a material effect on the Company’s consolidated financial statements.

In March 2004, the FASB Emerging Issues Task Force (“EITF”) reached a consensus regarding EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” The consensus clarifies the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or held-to-maturity under SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities,” and investments accounted for under the cost method or the equity method. The recognition and measurement guidance for which the consensus was reached is to be applied to other-than-temporary impairment evaluations. In September 2004, the Financial Accounting Standards Board (“FASB”) issued a final FASB Staff Position, FSP EITF Issue 03-1-1, which has delayed the effective date for the measurement and recognition guidance of EITF 03-1. The comment period is currently open related to this staff position. The implementation date is unknown until further guidance is issued by the FASB. We are currently evaluating the impact of adopting EITF 03-1.

SFAS 123R, “Accounting for Stock-Based Compensation, Revised,” requires all public companies to record compensation cost for stock options provided to employees in return for employee service. The cost is measured at the fair value of the options when granted, and this cost is expensed over the employee service period, which is normally the vesting period of the options. This will apply to awards granted or modified as of the beginning of the first quarter or annual reporting period that begins after June 15, 2005. Compensation cost will also be recorded on the date of grant as the Company’s options vest immediately. The effect on results of operations will depend on the level of future option grants and the calculation of the fair value of the options granted at such future date and so cannot currently be predicted. No existing options vest after adoption date so no additional compensation expense will be recorded subsequent to the date of adoption with respect to outstanding options. There will be no significant effect on financial position as total equity will not change.

SFAS 153, “Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29,” modifies an exception from fair value measurement of nonmonetary exchanges. Exchanges that are not expected to result in significant changes in cash flows of the reporting

Page -9-

entity are not measured at fair value. This supersedes the prior exemption from fair value measurement for exchanges of similar productive assets, and applies for fiscal years beginning after June 15, 2005.

Statement of Position (“SOP”) 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” requires that a valuation allowance for loans acquired in a transfer, including in a business combination, reflect only losses incurred after acquisition and should not be recorded at acquisition. It applies to any loan acquired in a transfer that showed evidence of credit quality deterioration since it was made. This guidance is effective for all applicable transactions entered into December 15, 2004 or later.

The effect of these other new standards on the Company’s financial position and results of operations is not expected to be material upon and after adoption.

s) Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

2. SECURITIES

A summary of the amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of securities is as follows:

December 31,								2004									2003
(In thousands)
			Gross		Gross			Estimated				Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Available for sale:
U.S. Treasury and government
agency securities	$	53,736	$	519	$	(216	)	$	54,039	$	52,855	$	1,479	$	(165	)	$	54,169
State and municipal obligations		40,027		1,098		(81	)		41,044		35,495		1,619		(70	)		37,044
Mortgage-backed securities		107,609		483		(1,133	)		106,959		102,463		1,124		(1,101	)		102,486
Federal Reserve Bank Stock		36		-		-			36		36		-		-			36
Federal Home Loan Bank Stock		1,943		-		-			1,943		1,606		-		-			1,606
Total available for sale		203,351		2,100		(1,430	)		204,021		192,455		4,222		(1,336	)		195,341
Held to maturity:
State and municipal obligations		21,213		-		(82	)		21,131		14,396		-		(17	)		14,379
Total held to maturity		21,213		-		(82	)		21,131		14,396		-		(17	)		14,379
Total debt and equity securities	$	224,564	$	2,100	$	(1,512	)	$	225,152	$	206,851	$	4,222	$	(1,353	)	$	209,720

Securities with unrealized losses at year-end 2004 and 2003, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

December 31,							2004								2003
(In thousands)
	Less than 12 months				Greater than 12 months				Less than 12 months				Greater than 12 months
			Unrealized				Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

U.S. Treasury and government
agency securities	$	26,832	$	216	$	-	$	-	$	17,778	$	165	$	-	$	-
State and municipal obligations		26,343		127		1,070		35		12,308		87		-		-
Mortgage-backed securities		35,146		336		30,816		798		55,885		1,101		-		-
Total temporarily impaired securities	$	88,321	$	679	$	31,886	$	833	$	85,971	$	1,353	$	-	$	-

Unrealized losses on securities have not been recognized into income, as the losses on these securities would be expected to dissipate as they approach their maturity dates. The Company evaluates securities for other-than-temporary impairment periodically with increased

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frequency when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

The following table sets forth the fair value, amortized cost, maturities and approximated weighted average yield (based on the estimated annual income divided by the average book value) at December 31, 2004. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Yields on tax-exempt obligations have been computed on a tax-equivalent basis.

December 31, 2004
(Dollars in thousands)	Within							After One But							After Five But							After							No
	One Year							Within Five Years							Within Ten Years							Ten Years							Maturity							Total
	Fair Value Amount		Amortized Cost Amount		Yield			Fair Value Amount		Amortized Cost Amount		Yield			Fair Value Amount		Amortized Cost Amount		Yield			Fair Value Amount		Amortized Cost Amount		Yield			Fair Value Amount		Amortized Cost Amount		Yield			Fair Value Amount		Amortized Cost Amount
Available for sale:
U.S. Treasury and
government agency
securities	$	324	$	325		3.89	%	$	53,715	$	53,411		6.06	%	$	-	$	-		-	%	$	-	$	-		-	%	$	-	$	-		-	%	$	54,039	$	53,736
Mortgage-backed
securities		-		-		-			-		-		-			28,545		28,543		6.08			78,414		79,066		6.45			-		-		-			106,959		107,609
State and municipal
obligations		2,678		2,670		4.01			23,590		22,821		5.71			10,698		10,648		4.67			4,078		3,888		6.96			-		-		-			41,044		40,027
Nonmarketable equity
securities:
Federal Reserve Bank
Stock		-		-		-			-		-		-			-		-		-			-		-		-			36		36		3.00			36		36
Federal Home Loan
Bank Stock		-		-		-			-		-		-			-		-		-			-		-		-			1,943		1,943		1.70			1,943		1,943
Total available for sale		3,002		2,995		4.00			77,305		76,232		5.96			39,243		39,191		5.70			82,492		82,954		6.47			1,979		1,979		1.72			204,021		203,351

Held to maturity:
State and municipal
obligations		21,131		21,213		2.10			-		-		-			-		-		-			-		-		-			-		-		-			21,131		21,213
Total held to maturity		21,131		21,213		2.10			-		-		-			-		-		-			-		-		-			-		-		-			21,131		21,213

Total debt and equity
securities	$	24,133	$	24,208		2.33	%	$	77,305	$	76,232		5.96	%	$	39,243	$	39,191		5.70	%	$	82,492	$	82,954		6.47	%	$	1,979	$	1,979		1.72	%	$	225,152	$	224,564

There were $56,005,000 and $71,637,000 of proceeds on sales of available for sale securities in 2004 and 2003, respectively. There were no sales in 2002. Gross gains of approximately $1,126,000 and $1,461,000 were realized on sales of available for sale securities during 2004 and 2003, respectively. Gross losses of approximately $392,000 and $635,000 were realized on sales of available for sale securities during 2004 and 2003, respectively. There were no sales of held to maturity securities during 2004, 2003 and 2002.

Securities having a fair value of approximately $110,479,000, and $122,219,000 at December 31, 2004 and 2003, respectively, were pledged to secure public deposits.

There was no investment that exceeded 10% of stockholders’ equity at December 31, 2004.

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3. LOANS

The following table sets forth the major classifications of loans:

December 31,	2004			2003
(In thousands)
Real estate mortgage loans	$	236,812		$	213,256
Commercial, financial, and agricultural loans		34,342			33,810
Installment/consumer loans		6,685			6,105
Real estate construction loans		18,452			20,037

Total loans		296,291			273,208
Unearned income		(157	)		(20	)
		296,134			273,188
Allowance for loan losses		(2,188	)		(2,144	)
Net loans	$	293,946		$	271,044

Lending Risk

The principal business of the Bank is lending, primarily in commercial real estate loans, construction loans, home equity loans, land loans, consumer loans, residential mortgages and commercial loans. The Bank considers its primary lending area to be eastern Long Island in Suffolk County, New York and a substantial portion of the Bank’s loans are secured by real estate in this area. Accordingly, the ultimate collectibility of such a loan portfolio is susceptible to changes in market and economic conditions in this region.

Allowance for Loan Losses

The following table sets forth changes in the allowance for loan losses.

December 31,	2004		2003		2002
(In thousands)
Allowance for loan losses
balance at beginning of period	$	2,144	$	2,294	$	2,249
Charge-offs:
Real estate mortgage loans		3		38		4
Commercial, financial and agricultural loans		302		163		212
Installment/consumer loans		65		148		22
Total charge-offs		370		349		238
Recoveries:
Real estate mortgage loans		23		13		8
Commercial, financial and agricultural loans		61		90		44
Installment/consumer loans		30		96		31
Total recoveries		114		199		83
Net charge-offs (recoveries)		256		150		155
Provision for loan losses
charged to operations		300		-		220
Balance before reclass to other liabilities		2,188		2,144		2,314

Net change in other liabilities allocated
to off balance sheet items		-		-		(20	)

Balance at end of period	$	2,188	$	2,144	$	2,294

Past Due, Nonaccrual and Restructured Loans

Nonaccrual loans at December 31, 2004 and 2003 were $1,695,000 and $152,000, respectively. There were no loans 90 days or more past due that were still accruing or any restructured loans at December 31, 2004 and 2003. Gross interest income on nonaccrual loans that would have been recorded under original terms during the year ended December 31, 2004 and 2003 were $16,000 and $9,000, respectively. Gross interest income recorded during the year ended December 31, 2004 and 2003 were $12,000 and $6,000, respectively.

As of December 31, 2004 and 2003, the Bank did not have any impaired loans as defined in SFAS No. 114.

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Related Party Loans

Certain directors, executive officers, and their related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2004 and 2003.

The following table sets forth selected information about related party loans at December 31, 2004.

	Balance Outstanding
(In thousands)
Balance at December 31, 2003	$	888
New loans		373
Effective change in related parties		(74	)
Advances		41
Repayments		(9	)
Balance at December 31, 2004	$	1,220

4. DEPOSITS

Time Deposits

The following table sets forth the remaining maturities of the Bank’s time deposits at December 31, 2004.

	Less than $100,000		$100,000 or Greater		Total
(In thousands)
3 months or less	$	14,522	$	23,798	$	38,320
Over 3 thru 6 months		6,533		4,486		11,019
Over 6 thru 12 months		6,783		3,201		9,984
Over 12 months		2,881		1,687		4,568
Over 24 months		839		1,525		2,364
Over 36 months		1,123		609		1,732
Over 48 months		144		-		144
Over 60 months		-		-		-
Total	$	32,825	$	35,306	$	68,131

Deposits from principal officers, directors and their affiliates at year-end 2004 and 2003 were approximately $4,177,000 and $2,731,000, respectively.

5. BANKING PREMISES AND EQUIPMENT

Banking premises and equipment consist of:

December 31,	2004			2003
(In thousands)
Land	$	6,229		$	3,846
Building and improvements		7,036			6,871
Furniture and fixtures		6,110			5,562
Leasehold improvements		1,226			1,226
		20,601			17,505
Less: accumulated
depreciation and amortization		(6,784	)		(5,882	)
	$	13,817		$	11,623

The Company has purchase commitments outstanding at December 31, 2004 for purchase of real estate in the Town of Southold for $250,000 and the Town of Brookhaven for $1,500,000.

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6. INCOME TAXES

The components of the provision for income taxes are as follows:

Year Ended December 31,	2004		2003		2002
(In thousands)
Current:
Federal	$	4,453	$	4,361	$	3,778
State		1,139		1,090		923
		5,592		5,451		4,701
Deferred:
Federal		152		30		7
State		27		7		14
		179		37		21
Total	$	5,771	$	5,488	$	4,722

The reconciliation of the expected Federal income tax expense at the statutory tax rate to the actual provision follows:

Year Ended December 31,				2004						2003						2002
(In thousands)				Percentage						Percentage						Percentage
				of Pre-tax						of Pre-tax						of Pre-tax
	Amount			Earnings			Amount			Earnings			Amount			Earnings

Federal income tax expense computed by applying the statutory rate to income before income taxes	$	5,531			34	%	$	5,280			35	%	$	4,502			34	%
Tax exempt interest		(552	)		(4	)		(544	)		(4	)		(563	)		(4	)
State taxes, net of Federal income tax benefit		767			5			721			5			655			5
Other		25			1			31			-			128			1
Provision for income taxes	$	5,771			36	%	$	5,488			36	%	$	4,722			36	%

Deferred tax assets and liabilities are comprised of the following:

December 31,	2004			2003
(In thousands)
Deferred tax assets:
Allowance for loan losses	$	924		$	900
Pension expense		-			110
Total		924			1,010

Deferred tax liabilities:
Pension expense		(184	)		-
Other		(78	)		(181	)
Depreciation		(57	)		(45	)

Net deferred tax asset		605			784

SFAS No. 115 deferred tax liability		(267	)		(1,151	)
Minimum pension liability adjustment		81			113
Net deferred tax asset (liability)	$	419		$	(254	)

Since the Bank has exceeded the threshold of $500,000,000 in average assets, the tax basis in the bad debt reserve prior to January 1, 2004 is to be recaptured for federal tax purposes. The Bank intends to recapture this using the deferral method and has previously provided for the taxes relating to this recapture. Subsequent to January 1, 2004, the Bank is on a specific charge-off method for federal tax purposes.

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7. EMPLOYEE BENEFITS

a) Pension Plan and Supplemental Executive Retirement Plan

The Bank maintains a noncontributory pension plan through the New York State Bankers Association Retirement System covering all eligible employees. The Bank uses a September 30 measurement date for this plan.

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). The SERP provides benefits to certain employees, designated by the Compensation Committee of the Board of Directors, whose benefits under the Pension Plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust in order to maintain the tax-deferred status of the individuals in the plan. As a result, the assets of the trust are reflected on the Consolidated Statements of Condition of the Company. The effective date of the SERP was January 1, 2001. SERP expense was $149,000, $142,000, and $107,000 in 2004, 2003 and 2002, respectively.

The following table sets forth the plans’ changes in obligations and funded status projected to September 30, 2004 and 2003 (measurement dates).

	Pension Benefits						SERP Benefits
At December 31,	2004			2003			2004			2003
(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	3,382		$	2,847		$	1,041		$	936
Service cost		277			265			63			59
Expenses		(35	)		(27	)		-			-
Interest cost		200			175			52			46
Benefits paid		(123	)		(131	)		-			-
Additional prior service cost		-			-			-			-
Assumption changes and other		75			253			322			-
Benefit obligation at end of year	$	3,776		$	3,382		$	1,478		$	1,041

Change in plan assets, at fair value
Plan assets at beginning of year	$	2,508		$	2,166			-			-
Actual return on plan assets		295			391			-			-
Employer contribution		1,114			109			-			-
Benefit paid		(123	)		(131	)		-			-
Expenses		(35	)		(27	)		-			-
Plan assets at end of year	$	3,759		$	2,508			-			-

Funded status (plan assets less benefit obligations)	$	(16	)	$	(873	)	$	(1,452	)	$	(1,016	)
Unrecognized net actuarial loss		795			836			531			216
Unrecognized prior service cost		147			155			-			-
Unrecognized transition asset		(12	)		(20	)		426			454
Minimum additional pension liability		-			(166	)		(202	)		(108	)
Accrued benefit cost	$	914		$	(68	)	$	(697	)	$	(454	)

Amounts recognized in the statement of condition consist of:

	Pension Benefits					SERP Benefits
At December 31,	2004		2003			2004			2003
(In thousands)
Prepaid benefit cost	$	914	$	98		$	-		$	-
Accrued benefit cost		-		-			(495	)		(346	)
Intangible assets		-		(166	)		(202	)		(108	)
Other		-		-			-			-
Net amount recognized	$	914	$	(68	)	$	(697	)	$	(454	)

Page -15-

	Pension Benefits									SERP Benefits
At December 31,	2004			2003			2002			2004			2003			2002
(In thousands)
Components of net periodic benefit cost
Service cost	$	277		$	265		$	201		$	63		$	59		$	45
Interest cost		200			175			150			52			46			35
Expected return on plan assets		(208	)		(185	)		(196	)		-			-			-
Amortization of net loss		25			29			-			23			7			27
Amortization of unrecognized prior service cost		9			9			9			-			-			-
Amortization of unrecognized transition obligation		(8	)		(8	)		(9	)		(28	)		(28	)		-
Net periodic benefit cost	$	295		$	285		$	155		$	110		$	84		$	107

The net minimum pension liability included in other comprehensive income for the pension for 2004 and 2003 was $0 and $106,000, respectively. The net minimum liability included in other comprehensive income for the SERP for 2004 and 2003 was $121,000 and $65,000, respectively. The accumulated benefit obligation for the pension plan for 2004 and 2003 was $2,907,000 and $2,577,000, respectively. The accumulated benefit obligation for the SERP for 2004 and 2003 was $697,000 and $458,000, respectively. The Company expects to contribute approximately $263,000 for the pension plan and approximately $66,000 for the SERP in 2005.

The following benefit payments, which reflect expected future service, as appropriate are expected to be paid as follows:

Year	Pension Payments
(In thousands)

2005	$	114
2006		133
2007		132
2008		131
2009		183
2010-2014		893

The Company’s pension plan weighted-average asset allocation at September 30, 2004 and 2003 by asset category are as follows:

Plan Assets at September 30,	2004			2003
(In thousands)

Asset Category:
Equity Securities		64.7	%		59.7	%
Debt Securities		34.9			34.5
Other		0.4			5.8
Total		100.0	%		100.0	%

Investment Policies

The New York State Bankers Retirement System (the “System”) was established in 1938 to provide for the payment of benefits to employees of participating banks. The System is overseen by a Board of Trustees (“Trustees”), who meet quarterly, and set the investment policy guidelines.

The System utilizes two investment management firms, (which will be referred to as “Firm I” and “Firm II”) each investing approximately 50% of the total portfolio. The System’s investment objective is to exceed the investment benchmarks in each asset category. Each firm operates under a separate written investment policy approved by the Trustees and designed to achieve an allocation approximating 60% invested in Equity Securities and 40% invested in Debt Securities.

Each Firm reports at least quarterly to the investment committee of the System and semi-annually to the Trustees.

Equities: The target allocation percentage for equity securities is 60% but may vary from 50%-70% at the investment manager’s discretion.

Firm I is employed for its expertise as a Value Manager. It is allowed to invest a certain amount of the equity portfolio under its management in international securities and to hedge said international securities so as to protect against currency devaluations.

Page -16-

The equities managed by Firm II are in a commingled Large Cap Equity Fund. The Fund is invested in a diversified portfolio of common or capital stocks, or bonds, debentures, notes, or preferred stocks convertible into common or capital stocks, or in other types of equity investments whether foreign or domestic. Short-term obligations of the U.S. Government, or other short-term investments, may be purchased and held pending the selection and purchase of suitable investments, which meet the guidelines above. Investments may include units of participation in any other Fund established within this Fund, which consists of assets of the nature described in the preceding paragraph.

Fixed Income: For both investment portfolios, the target allocation percentage for debt securities is 40%, but may vary from 30% to 50% at the investment manager’s discretion.

The Fixed Income Portfolio managed by Firm I operates with guidelines relating to types of debt securities, quality ratings, maturities, and maximums single and sector allocations.

The portfolio may trade foreign currencies in both spot and forward markets to affect securities transactions and to hedge underlying asset positions. The purchase and sale of futures and options on futures on foreign currencies and on foreign and domestic bonds, bond indices and short-term securities is permitted; however, purchases may not be used to leverage the portfolio. Currency transactions may only be used to hedge 0-100% of currency exposure of foreign securities.

The Fixed Income managed by Firm II is in a commingled Fixed Income Fund. This style of fixed income management focuses on high quality securities drawn from various market sectors, including U.S. treasuries and government sponsored agencies, sovereigns, supranationals, residential Mortgage Backed Securities, corporates, Commercial Mortgage Backed Securities, Asset Backed Securities, and municipals as set forth in its guidelines and the System’s investment policy.

Expected Long-Term Rate-of-Return

The expected long-term rate-of-return on plan assets reflects long-term earnings expectations on existing plan assets and those contributions expected to be received during the current plan year. In estimating that rate, appropriate consideration was given to historical returns earned by plan assets in the fund and the rates of return expected to be available for reinvestment. Average rates of return over the past 1, 3, 5 and 10-year periods were determined and subsequently adjusted to reflect current capital market assumptions and changes in investment allocations.

	Pension Benefits									SERP Benefits
At December 31,	2004			2003			2002			2004			2003			2002

Weighted Average Assumptions Used to Determine Benefit Obligations
Discount Rate		6.00	%		6.00	%		6.25	%		4.90	%		5.14	%		5.14	%
Rate of Compensation Increase		4.00			4.00			4.00			4.00			4.00			4.00
Expected Long-term Rate of Return		8.00			8.00			8.50			-			-			-
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost (Income)
Discount Rate		6.00	%		6.25	%		6.75	%		5.14	%		5.14	%		4.96	%
Rate of Compensation Increase		4.00			4.00			4.00			4.00			4.00			4.00
Expected Long-term Rate of Return		8.00			8.50			8.50			-			-			-

b) 401(k) Plan

A savings plan is maintained under Section 401(k) of the Internal Revenue Code and covers substantially all current employees. Newly hired employees can elect to participate in the savings plan after completing six months of service. Under the provisions of the savings plan, employee contributions are partially matched by the Bank with cash contributions. Participants can invest their account balances into several investment alternatives. The savings plan does not allow for investment in the Company’s common stock. During the years ended December 31, 2004, 2003 and 2002 the Bank made cash contributions of $110,000, $108,000, and $89,000, respectively.

c) Equity Incentive Plan

During 1996, the Bridge Bancorp, Inc. Equity Incentive Plan (the “Plan”) was approved by the shareholders to provide for the grant of options to purchase up to a total of 648,000 shares of common stock of the Company and for the award of shares of common stock as a bonus. During 2001, a plan amendment to cover non-employee directors was adopted by the shareholders. Of the total 648,000 shares of common stock approved for issuance under the Plan, at December 31, 2004, 325,849 shares remain available for issuance.

Page -17-

The Compensation Committee of the Board of Directors determines options awarded under the Plan. The Company accounts for this Plan under APB Opinion No. 25, under which no compensation cost has been recognized for stock options granted. Stock options are immediately exercisable.

For the Year Ended December 31,				2004					2003					2002
(In thousands)
				Weighted					Weighted					Weighted
	Number			Average		Number			Average		Number			Average
	of			Exercise		of			Exercise		of			Exercise
	Options			Price		Options			Price		Options			Price

Outstanding, beginning of the year		136,725		$	13.22		163,575		$	11.85		146,475		$	11.47
Granted		14,845		$	24.00		26,550		$	15.47		25,350		$	12.53
Exercised		(49,141	)	$	12.54		(53,400	)	$	10.11		(8,250	)	$	7.39
Forfeited		-			-		-			-		-			-
Outstanding and exercisable, end of the year		102,429		$	15.10		136,725		$	13.22		163,575		$	11.85
Weighted average fair value of options granted				$	4.45				$	5.00				$	5.12
Weighted average remaining contractual life					6.32 years

		Number of
Range of Exercise Prices		Shares			Price
		4,026		$	9.78
		9,750		$	11.00
		14,775		$	13.16
		37,433		$	14.67
		22,350		$	15.47
		14,095		$	24.00

The Company’s Equity Incentive Plan also provides for issuance of restricted stock awards. During the years ended December 31, 2004 and 2003, the Company granted restricted stock awards of 4,570 and 7,830 shares, respectively. These awards vest over three years in January of each year following the date of the award. Such shares are subject to restrictions based on continued service as employees of the Company or employees of subsidiaries of the Company. Compensation expense attributable to these awards was approximately $101,000, $98,000 and $89,000 for the years ended December 31, 2004, 2003, and 2002, respectively. Unearned compensation is recorded as a reduction of stockholders’ equity until earned.

8. EARNINGS PER SHARE

The following is a reconciliation of earnings per share for December 31, 2004, 2003 and 2002. All share and per share amounts have been adjusted for the three-for-two stock split effective July 9, 2004.

For the Year Ended December 31,	2004		2003		2002
(In thousands, except per share data)

Net Income	$	10,377	$	9,598	$	8,517

Common Equivalent Shares:

Weighted Average Common Shares Outstanding		6,255		6,197		6,183
Weighted Average Common Equivalent Shares		75		57		44
Weighted Average Common and Common Equivalent Shares		6,330		6,254		6,227
Basic earnings per share	$	1.66	$	1.55	$	1.38
Diluted earnings per share	$	1.64	$	1.53	$	1.37

9. COMMITMENTS AND CONTINGENCIES AND OTHER MATTERS

In the normal course of business, there are various outstanding commitments and contingent liabilities, such as claims and legal actions, minimum annual rental payments under non-cancelable operating leases, guarantees and commitments to extend credit, which are not reflected in the accompanying financial statements. No material losses are anticipated as a result of these actions or claims.

Page -18-

a) Leases

The Company is obligated to make minimum annual rental payments under non-cancelable operating leases on its premises. Projected minimum rentals under existing leases are as follows:

December 31, 2004
(In thousands)
2005	$	464
2006		467
2007		344
2008		213
2009		197
Thereafter		1,273
Total minimum rentals	$	2,958

Certain leases contain renewal options and rent escalation clauses. In addition, certain leases provide for additional payments based upon real estate taxes, interest and other charges. Rental expenses under these leases for the years ended December 31, 2004, 2003 and 2002 approximated $501,000, $492,000, and $434,000, respectively.

b) Loan commitments

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, often including obtaining collateral at exercise of the commitment.

The following represents commitments outstanding:

December 31,	2004		2003
(In thousands)
Standby letters of credit	$	1,803	$	1,970
Loan commitments outstanding ⁽¹⁾		6,090		8,798
Unused equity lines		37,233		33,121
Unused construction lines		10,123		4,138
Unused lines of credit		21,751		21,061
Unused overdraft lines		11,408		10,973
Total commitments outstanding	$	88,408	$	80,061

(1) Of the $6,090 of loan commitments outstanding, all are at variable interest rates.

c) Other

During 2004, the Bank was required to maintain certain cash balances with the Federal Reserve Bank of New York for reserve and clearing requirements. These balances averaged $1,683,000 in 2004.

During 2004, 2003 and 2002, the Bank maintained an overnight line of credit with the Federal Home Loan Bank of New York (“FHLB”). The Bank has the ability to borrow against its unencumbered residential mortgages and investment securities owned by the Bank. At December 31, 2004, $20,000,000 in FHLB loans and $6,700,000 in federal funds purchased were outstanding as overnight borrowings. There were no amounts outstanding at December 31, 2003 in FHLB loans, but there were federal funds purchased of $5,900,000. At December 31, 2004, the Bank had aggregate lines of credit of $42,000,000 with unaffiliated correspondent banks to provide short-term credit for liquidity requirements. Of these aggregate lines of credit, $22,000,000 is available on an unsecured basis. As of December 31, 2004, the Bank had $26,700,000 in such borrowings outstanding.

In March 2001, the Bank entered into a Master Repurchase Agreement with the FHLB whereby the FHLB agrees to purchase securities

Page -19-

from the Bank, upon the Bank’s request, with the simultaneous agreement to sell the same or similar securities back to the Bank at a future date. Securities are limited, under the agreement, to government securities, securities issued, guaranteed or collateralized by any agency or instrumentality of the U.S. Government or any government sponsored enterprise, and non-agency AA and AAA rated mortgage-backed securities. At December 31, 2004, there was $25,446,000 available for transactions under this agreement. There were no balances outstanding at year-end.

10. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates are made at a specific point in time and are based on existing on-and off-balance sheet financial instruments. Such estimates are generally subjective in nature and dependent upon a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.

The Company used the following method and assumptions in estimating the fair value of its financial instruments:

Cash and Due from Banks and Federal Funds Sold: Carrying amounts approximate fair value, since these instruments are either payable on demand or have short-term maturities.

Securities Available for Sale and Held to Maturity: The estimated fair values are based on independent dealer quotations and quoted market prices.

Loans: The estimated fair values of real estate mortgage loans and other loans receivable are based on discounted cash flow calculations that apply available market benchmarks when establishing discount factors for the types of loans. All nonaccrual loans are carried at their current fair value.

Deposits: The estimated fair value of certificates of deposits are based on discounted cash flow calculations that apply interest rates currently being offered by the Bank for deposits with similar remaining maturities to a schedule of aggregated expected monthly maturities. Stated value is fair value for all other deposits.

Borrowings: The estimated fair value of borrowed funds is based on the discounted value of contractual cash flows using interest rates currently in effect for borrowings with similar maturities and collateral requirements.

Accrued Interest Receivable and Payable: For these short-term instruments, the carrying amount is a reasonable estimate of the fair value.

The estimated fair values and recorded carrying values of the Bank’s financial instruments are as follows:

December 31,

2004

2003

(In thousands)

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value

Financial Assets:

Cash and due from banks

8,744

12,906

Interest bearing deposits with banks

118

133

Securities available for sale

202,042

193,699

Securities restricted

1,979

1,642

Securities held to maturity

21,213

21,131

14,396

14,379

Loans

293,946

294,640

271,044

271,349

Accrued interest receivable

2,469

2,359

Financial Liabilities:

Demand and other deposits

469,311

469,211

457,159

457,493

Overnight borrowings

26,700

5,900

Accrued interest payable

273

266

11. REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies.

Page -20-

Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification also are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2004, that the Company and the Bank meet all capital adequacy requirements with which it must comply.

As of December 31, 2004, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. Since that notification, there are no conditions or events that management believes have changed the institution’s category.

The Company and the Bank’s actual capital amounts and ratios are presented in the following table:

Bridge Bancorp, Inc. (Consolidated)

As of December 31,

2004

(In thousands)

To Be Well

Capitalized Under

Prompt Corrective

Action Provisions

For Capital

Adequacy

Purposes

Actual

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital (to risk weighted assets)

48,998

13.5

28,940

>8.0

36,174

>10.0

Tier 1 Capital (to risk weighted assets)

46,649

12.9

14,470

>4.0

21,705

> 6.0

Tier 1 Capital (to average assets)

46,649

8.3

22,468

>4.0

28,085

> 5.0

As of December 31,	2003
(In thousands)											To Be Well Capitalized Under Prompt Corrective Action Provisions
						For Capital Adequacy Purposes

	Actual
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to risk weighted assets)	$	43,373		13.0	%	$	26,708		>8.0	%	$	33,386		>10.0	%
Tier 1 Capital (to risk weighted assets)		41,229		12.4	%		13,354		>4.0	%		20,031		> 6.0	%
Tier 1 Capital (to average assets)		41,229		7.9	%		20,953		>4.0	%		26,191		> 5.0	%

Page -21-

Bridgehampton National Bank

As of December 31,

2004

(In thousands)

To Be Well

Capitalized Under

Prompt Corrective

Action Provisions

For Capital

Adequacy

Purposes

Actual

Amount

Ratio

Amount

Ratio

Amount

Ratio

Total Capital (to risk weighted assets)

47,773

13.2

28,924

>8.0

36,154

>10.0

Tier 1 Capital (to risk weighted assets)

45,585

12.6

14,462

>4.0

21,693

> 6.0

Tier 1 Capital (to average assets)

45,585

8.1

22,512

>4.0

28,140

> 5.0

As of December 31,	2003
(In thousands)											To Be Well Capitalized Under Prompt Corrective Action Provisions
						For Capital Adequacy Purposes

	Actual
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to risk weighted assets)	$	42,415		12.7	%	$	26,700		>8.0	%	$	33,376		>10.0	%
Tier 1 Capital (to risk weighted assets)		40,271		12.1	%		13,350		>4.0	%		20,025		> 6.0	%
Tier 1 Capital (to average assets)		40,271		7.7	%		20,971		>4.0	%		26,214		> 5.0	%

12. BRIDGE BANCORP, INC. (PARENT COMPANY ONLY)

Condensed Statements of Financial Condition

December 31,	2004			2003
(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	1,024		$	684
Dividend receivable		1,339			2,626
Other assets		201			99
Investment in the Bank		45,988			42,007
Total Assets	$	48,552		$	45,416

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Dividends payable	$	1,313		$	2,608
Other liabilities		26			14
Total Liabilities		1,339			2,622

Stockholders’ Equity		49,543			44,703
Treasury stock at cost, 131,817 and 102,002 shares at
December 31, 2004 and 2003, respectively		(2,330	)		(1,909	)
Total Stockholders’ Equity		47,213			42,794
Total Liabilities and Stockholders’ Equity	$	48,552		$	45,416

Page -22-

Condensed Statements of Income

Year Ended December 31,	2004		2003		2002
(In thousands)
Dividend income from the Bank	$	5,104	$	4,893	$	3,585
Other operating expenses		-		1		1
Income before income taxes and equity in
undistributed earnings of the Bank		5,104		4,892		3,584
Income tax provision		-		-		-
Income before equity in undistributed
earnings of the Bank		5,104		4,892		3,584
Equity in undistributed earnings of the Bank		5,273		4,706		4,933
Net income	$	10,377	$	9,598	$	8,517

Condensed Statements of Cash Flows

Year Ended December 31,	2004			2003			2002
(In thousands)

Operating Activities:
Net income	$	10,377		$	9,598		$	8,517
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of the Bank		(5,273	)		(4,706	)		(4,933	)
Income tax benefit from exercise of employee stock options		7			38			-
Decrease (increase) in other assets		1,432			(2,043	)		-
Increase (decrease) in other liabilities		(5	)		166			(38	)
Net cash provided by operating activities		6,538			3,053			3,546

Cash flows used by financing activities:
Net proceeds from issuance of common stock upon exercise of stock options		203			440			122
Payment for the purchase of treasury stock		(611	)		-			(1,067	)
Dividends paid		(5,790	)		(2,943	)		(2,480	)
Net cash used by financing activities		(6,198	)		(2,503	)		(3,425	)

Net increase in cash and cash equivalents		340			550			121
Cash and cash equivalents at beginning of year		684			134			13
Cash and cash equivalents at end of year	$	1,024		$	684		$	134

Page -23-

13. QUARTERLY FINANCIAL DATA (Unaudited)

Selected Consolidated Quarterly Financial Data

2004 Quarter Ended,

March 31,

June 30,

September 30,

December 31,

(In thousands, except per share amounts)

Interest income

6,443

6,651

6,955

6,874

Interest expense

539

563

600

649

Net interest income

5,904

6,088

6,355

6,225

Provision for loan losses

100

150

Net interest income after provision for loan losses

5,904

6,038

6,255

6,075

Other income

1,591

1,215

1,284

1,350

Other expenses

3,403

3,296

3,383

3,482

Income before income taxes

4,092

3,957

4,156

3,943

Provision for income taxes

1,467

1,415

1,493

1,396

Net income

2,625

2,542

2,663

2,547

Basic earnings per share

0.42

0.41

0.43

0.41

Diluted earnings per share

0.41

0.40

0.42

0.41

2003 Quarter Ended,		March 31,		June 30,		September 30,		December 31,
(In thousands, except per share amounts)
Interest income	$	6,568	$	6,222	$	6,488	$	6,690
Interest expense		769		715		560		557
Net interest income		5,799		5,507		5,928		6,133
Provision for loan losses		-		-		-		-
Net interest income after provision for loan losses		5,799		5,507		5,928		6,133
Other income⁽¹⁾		1,482		1,537		1,085		612
Other expenses		3,289		3,147		3,299		3,262
Income before income taxes		3,992		3,897		3,714		3,483
Provision for income taxes		1,454		1,422		1,356		1,256
Net income	$	2,538	$	2,475	$	2,358	$	2,227
Basic earnings per share	$	0.42	$	0.40	$	0.38	$	0.35
Diluted earnings per share	$	0.41	$	0.40	$	0.37	$	0.35

(1)	During the fourth quarter of 2003, the Company had net realized losses of $374,000 on sales of available for sale securities.

	Amounts have been restated for a three-for-two stock split, in the form of a stock dividend, effective July 9, 2004.

Page -24-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Bridge Bancorp, Inc.:

We have audited the accompanying consolidated statements of condition of Bridge Bancorp, Inc. and subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bridge Bancorp, Inc. and subsidiary as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

	/s/ Crowe Chizek and Company LLC
	Crowe Chizek and Company LLC

Livingston, New Jersey

February 11, 2005

Page -25-

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2004. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

Report By Management On Internal Control Over Financial Reporting

Management of Bridge Bancorp, Inc. (“the Company”) is responsible for establishing and maintaining an effective system of internal control over financial reporting. The Company's system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the Company’s systems of internal control over financial reporting as of December 31, 2004. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2004, the Company maintained effective internal control over financial reporting based on those criteria.

The Company’s independent registered public accounting firm that audited the financial statements that are included in this annual report on Form 10-K, has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting. The attestation report of Crowe Chizek and Company LLC appears below.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page -26-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee

Board of Directors

Bridge Bancorp, Inc.

Bridgehampton, New York

We have audited management's assessment, included in the accompanying Report By Management On Internal Control Over Financial Reporting, that Bridge Bancorp, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Bridge Bancorp, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Bridge Bancorp, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, Bridge Bancorp, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Bridge Bancorp, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the years then ended, and our report dated February 11, 2005 expressed an unqualified opinion on those consolidated financial statements.

	/s/ Crowe Chizek and Company LLC
	Crowe Chizek and Company LLC

Livingston, New Jersey

April 21, 2005

Page -27-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BRIDGE BANCORP, INC.
	Registrant


April 28, 2005	/s/ Thomas J. Tobin
	Thomas J. Tobin
	President and Chief Executive Officer

April 28, 2005	/s/ Janet T. Verneuille
	Janet T. Verneuille,
	Senior Vice President, Chief Financial Officer
	and Treasurer

Page -28-

EXHIBIT INDEX

Exhibit Number	Description of Exhibit	Exhibit

23	Consent of Independent Registered Public Accounting Firm

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)

Page -29-

																						Accumulated
																						Other
	Common Stock																		Unearned			Comprehensive
	Shares									Comprehensive			Undivided			Treasury			Stock			Income
	Outstanding			Amount			Surplus			Income ⁽¹⁾			Profits			Stock			Awards			(Loss)			Total

Balance at December 31, 2001		4,166,264			43		$	21,154					$	11,240		$	(1,608	)				$	2,032		$	32,861
Net income										$	8,517			8,517												8,517
Purchase of treasury stock		(57,000	)														(1,067	)								(1,067	)
Stock awards vested		3,222						7									53									60
Exercise of stock options		5,500						(36	)								98									62
Cash dividends declared, $0.41 per share														(2,518	)											(2,518	)
Other comprehensive income, net of tax
Unrealized net gains in securities available for sale											2,248												2,248			2,248
Minimum pension liability adjustment											(192	)											(192	)		(192	)
Comprehensive Income											10,573
Balance at December 31, 2002		4,117,986			43			21,125						17,239			(2,524	)					4,088			39,971
Net income											9,598			9,598												9,598
Stock awards vested		4,872						42									81		$	40						163
Stock awards granted								34									87			(121	)					-
Exercise of stock options, net of tax benefit		32,737						(7	)					38			447									478
Cash dividends declared, $0.78 per share														(4,893	)											(4,893	)
Other comprehensive income, net of tax
Unrealized net losses in securities available for sale											(2,597	)											(2,597	)		(2,597	)
Minimum pension liability adjustment											74												74			74
Comprehensive Income											7,075
Balance at December 31, 2003		4,155,595			43			21,194						21,982			(1,909	)		(81	)		1,565			42,794
Net income											10,377			10,377												10,377
Stock awards vested		5,040						30									66			73						169
Stock awards granted								58									55			(113	)					-
Exercise of stock options, net of tax benefit		24,417						201									69									270
Treasury stock purchases		(20,000	)														(611	)								(611	)
Cash dividends declared, $0.72 per share														(4,503	)											(4,503	)
Effect of three-for-two stock split (in the form of a stock dividend)		2,089,437			21			(21	)																	-
Other comprehensive income, net of tax
Unrealized net losses in securities available for sale											(1,333	)											(1,333	)		(1,333	)
Minimum pension liability adjustment											50												50			50
Comprehensive Income										$	9,094
Balance at December 31, 2004		6,254,489		$	64		$	21,462					$	27,856		$	(2,330	)	$	(121	)	$	282		$	47,213


(1) Disclosure of reclassification amount:
December 31,		2004			2003			2002
Comprehensive Income Items:
Unrealized (loss)/gain arising during the period, net of tax
of $591, $1,357 and $1,447 in 2004, 2003 and 2002	$	(891	)	$	(2,098	)	$	2,248
Less: reclassification adjustment, net of taxes
of $293, $327, $0 in 2004, 2003 and 2002
for losses/(gains) included in income		442			499			-
	$	(1,333	)	$	(2,597	)	$	2,248